By BILL VIRGIN, P-I REPORTER

Published 10:00 pm, Wednesday, February 18, 2009

Satellite radio began life with advantages, momentum and publicity that traditional broadcast radio could only envy: high-profile deals with former radio mainstays such as Howard Stern and major league baseball, the allure of hundreds of channels offering niches and genres no longer heard on the airwaves, a lot of it commercial-free, and access to potentially millions of new customers through agreements with auto manufacturers to put satellite-radio receivers in their vehicles.

The prospects for this new competitor, and its potential to drain off listeners, caused considerable consternation in broadcast radio. Losing a ratings generator such as Stern to satellite was bad enough. Having to compete with satellite or programming also heard on local stations, including National Public Radio shows and Seattle Mariners baseball, was worse.

But barely seven years after the service's introduction, the industry is down from two independent, publicly traded companies to one company whose stock has been driven down to 16 cents a share and that had to turn to a satellite-TV operator, Liberty Media, for a capital infusion to avoid bankruptcy. That followed by less than a year the combination of former satellite radio competitors Sirius and XM, also a deal that was not done from a position of strength.

Broadcast radio still has mammoth headaches -- the collapse of advertising revenue, competition from personal music devices and the Internet, declining listenership among younger audiences -- but as it turned out, satellite radio isn't one of them.

So why not? Veteran radio programmer and host Kent Phillips of KPLZ-FM/ 101.5 cites three reasons. One is the economy. "What a rotten time to launch a service you have to pay for when you can get it for free," he says. Indeed, XM started in late 2001 (Sirius followed shortly thereafter) as the economy was stalling, and the combined companies are now trying to persuade people to pay for their services in the midst of a much worse recession.

Beyond that, "The programming wasn't that much different," he says. "A lot of the '70s and '80s channels were just a repeat of what you get for free." And with budget cuts, some of the early offerings have been cut back.

Finally, "long-range, the Internet will supplant it," Phillips adds. After years of fits and starts and fights over issues such as royalties for music played on Internet stations, listening and advertising support are finally growing. "The numbers are very strong for streaming," he says, and because they are, "now you can monetize it." Furthermore, when cars come equipped with WiFi, WiMax or some similar wireless Internet technology, those streams will be available in-vehicle just as traditional broadcast radio is now, he says.

Although Sirius XM says it has 19 million subscribers, Sandusky Radio General Manager Marc Kaye says customer figures have been pumped up by free yearlong service that buyers of new cars got. The most recent earnings release from Sirius XM shows a conversion rate -- how many of those who signed up for paid subscriptions when the free service expired -- at just under 50 percent.

And although Sirius and XM offered a lot of commercial-free music channels, "if (listeners) wanted that kind of jukebox, they can play CDs in their cars" and not have to pay for it, he says.

The huge point of differentiation, he adds, is local content. Listeners don't object to commercials if the programming it pays for compels them to stick around. "Localized radio," Kaye says, "has a lot to offer."

In other radio notes:

KRKO-AM/1380 plans to debut its stronger signal Monday with a revised lineup of sport-talk shows. Whether local or syndicated, the programs will air live. Dan Patrick holds down 6-9 a.m., followed by Jim Rome 9 a.m.-noon and Chris Myers noon-3 p.m.

Jeff Aaron's local show will be expanding by an hour, 3-7 p.m., followed by Tony Bruno 7-10 p.m. and J.T. "The Brick" 10-11 p.m. KRKO will also carry Everett Silvertip and Aquasox games, Washington State football and basketball, NASCAR races, NHL hockey and high school sports.

King County Executive Ron Sims takes listener calls on "Weekday" at 10 a.m. Thursday on KUOW-FM/ 94.9. At 9 a.m. Friday, the guest is state Auditor Brian Sonntag.

Jim Wilke's "Jazz Northwest" at 1 p.m. Sunday on KPLU-FM/88.5 features a recent performance by the Steve Korn Quartet.

Singer and guitarist John Pizzarelli performs in the studios of KPLU-FM at 12:20 p.m. Tuesday.

KPTK-AM/1090 said it is running a talk show hosted by Nancy Skinner 6-9 weeknights while it awaits some resolution of a dispute between Randi Rhodes and her syndicator, or if Rhodes finds another distributor for her program.